What is meant by Time-based Billing?
The term "time-based billing" refers to a method of invoicing where the time spent on work serves as the basis for calculating the fee. This billing method is often used by service providers such as lawyers, consultants, or freelancers to calculate their services.
Typical software functions in the area of "time-based billing":
- Time tracking: Recording of hours worked, often with start and end times
- Project assignment: Allocation of recorded times to specific projects or clients
- Hourly rate management: Administration of different hourly rates for various employees or activities
- Invoice generation: Automatic creation of invoices based on recorded times
- Reporting: Generation of evaluations and reports on hours worked
- Client portal: Option for clients to view and approve time entries
- Integration with accounting systems: Automatic transfer of billing data to financial accounting
Examples of "time-based billing":
- Lawyer charges 2.5 hours for drafting a legal document
- IT consultant records 8 hours for software implementation
- Freelance designer invoices 4.5 hours for logo design
- Management consultant charges 40 hours for a week of on-site consulting
- Architect records 10 hours for creating construction plans
- Tax advisor invoices 3 hours for preparing a tax return
